Maryem Naili

This paper examines the relationship between social capital and trade credit among private firms headquartered in 111 developing economies. The paper shows that firms headquartered in countries with higher levels of social capital receive more trade credit from their suppliers and extend more trade credit to their customers than firms headquartered in countries with lower social capital. The findings remain robust after controlling for a wide range of firm-level and country-level characteristics. Additional analyses show that the relationship between social capital and trade credit is more pronounced in countries with strong institutional environments. The results further indicate that specific dimensions of social capital, particularly interpersonal trust and social tolerance, are positively associated with both supplier-provided and firm-provided trade credit. Overall, the findings highlight the importance of informal institutional environments in facilitating relational financing among private firms operating in developing economies.

This paper uses data from 61 countries to document the relationship between country-level social capital and corporate social responsibility (CSR) during the period between 2007 and 2023. We find that firms headquartered in countries with higher levels of social capital exhibit higher CSR engagement than firms headquartered in countries with lower levels of social capital. This association remains robust across a wide range of estimation approaches and sensitivity checks. Additional analyses explore the mechanisms through which social capital affects CSR by disentangling its underlying dimensions. Finally, we show that the economic value of CSR (as measured through its association with Tobin’s Q, sales growth, stock return volatility, and financial distress risk) varies with the level of social capital, with CSR playing a more prominent value-enhancing role in low-social-capital settings.

Purpose: This paper investigates the financing preferences and practices of Senegalese entrepreneurial firms, with a particular focus on understanding the gaps between the two and how they may contribute to financing constraints in developing economies. By juxtaposing the preferences of different financing options against their degree of usage, this study attempts to reveal the mismatch in demand and supply of entrepreneurial firms financing in Senegal.Design/methodology/approach: A structured questionnaire was used to survey 524 entrepreneurial firms, and data was analyzed using various statistical methods.Findings: The results indicate that the most preferred sources of financing for Senegalese entrepreneurial firms are self-financing and short-term bank loans. Short-term funding horizons are also much more preferred than their long-term counterparts. However, there is a mismatch between financing preferences and practices, particularly with regards to equity sources, which were found to be more preferred than used. The study argues that a combination of preferences, firm, and owner characteristics can explain the choice and frequency of usage of financing sources.Originality/value: This study contributes to the literature by contrasting preferences and practices, revealing gaps between theory and practice, and providing better insight into the real financing needs of entrepreneurial firms in developing economies. To the authors’ knowledge, this is the first study to examine the financing preferences of Senegalese entrepreneurial firms, making it an important contribution to the literature on entrepreneurial firms financing in developing economies.

Purpose: This study delves into the critical issue of banks' stability and profitability, which are crucial elements for fostering economic growth and preserving depositor confidence. Specifically, we scrutinize the impact of geopolitical risks on the profitability and solvency of banks operating in emerging economies across the Middle East and Africa.Design/methodology/approach: Employing a two-step Generalized Method of Moments (GMM) approach, we analyze a comprehensive dataset comprising 125 banks spanning 13 emerging economies in the Middle East and Africa, covering the period from 2003 to 2019.Findings: Our study reveals a significant sensitivity of Middle Eastern banks to geopolitical risks, wherein effective anticipation or adaptation to these risks positively influences bank performance. Conversely, the impact of geopolitical risk on African banking profitability appears inconclusive and statistically insignificant. These nuanced findings underscore the complex interplay between geopolitical dynamics and financial performance in diverse regional contexts, with implications for policymakers and industry stakeholders.Practical implications: Our findings underscore the need for nuanced policy responses and risk management strategies tailored to the unique challenges posed by geopolitical dynamics in emerging markets. Furthermore, they highlight the importance of continued research efforts to deepen our understanding of these complex interactions and inform more effective decision-making in the financial sector.Originality/value: Amidst growing recognition of the importance of geopolitical risks in financial markets, empirical studies exploring their precise impact on bank performance remain scarce. This study fills this gap by offering a pioneering investigation into the influence of geopolitical risks on bank profitability and solvency, using advanced econometric techniques and a substantial, diverse sample of banks in emerging economies across the Middle East and Africa.

This article uses data from 111 developing countries to document the effect of social capital on financing constraints faced by private firms. The results show that firms headquartered in countries with high social capital face lower financing constraints than firms headquartered in countries with low social capital. These findings are robust to a comprehensive inclusion of country-level and firm-level controls. We argue that social capital is instrumental in creating an environment in which managers are less likely to act opportunistically, thereby increasing the trust of capital providers in firms. Consequently, capital providers are more likely to grant credit to firms, thereby reducing the financing constraints. The findings also show that the relationship between social capital and financing constraints is moderated by firm-specific and country-specific characteristics. Firms with weaker fundamentals and firms headquartered in countries with weaker institutions are more likely to benefit from improvement in social capital. JEL Codes: A13, G3

Purpose: The purpose of this study is to provide a comprehensive review of the literature on financial inclusion, with a focus on its relationship to financial and economic development. Design/methodology/approach: This paper begins by surveying the field of financial inclusion research over the past 15 years, highlighting the evolution of how financial inclusion has been studied in practice. By reviewing 107 studies published between 2008 and 2023 in 63 peer-reviewed journals, the study emphasizes the importance of recent research in this field. Findings: The analysis reveals key findings on the positive impact of financial inclusion on economic growth, poverty reduction, financial stability and CO₂ emissions, among other factors. Despite the extensive empirical and theoretical work accomplished in the field, the study argues that there is still a need for further research on financial inclusion, including exploring new regions and financial and economic development indicators such as social capital, entrepreneurship and political stability. Practical implications: This research aspires to map the emerging discourse on this topic, identify major gaps, and provide a productive line to guide future research. This will contribute to the ongoing debate led by the World Bank on financial inclusion as an effective measure to fight poverty. This study attempts to proffer ideas to encourage collaborative research and deepen our understanding on the role of financial inclusion. Originality/value: This study offers a comprehensive overview of recent research on financial inclusion and highlights the need for further research in this field. This study also proposes a promising future research agenda to guide future advancements in the area of financial inclusion.

Purpose: This paper attempts to document the effect of economic uncertainty on financing constraints faced by private firms.Design/methodology/approach: Ordered logistic regression is used to analyze the data of private firms from 101 developing countries. The data was provided by the World Bank's Enterprise Surveys and was gathered during the period between 2006 and 2019.Findings: The findings show that firms headquartered in countries with high economic uncertainty face more financing constraints than firms headquartered in countries with low economic uncertainty. The authors argue that the increase in economic uncertainty allows capital providers to adjust their lending decisions by reducing the provision of capital to firms. The paper also shows that firms headquartered in countries with strong institutional infrastructure and well-functioning firms are less likely to be affected by economic uncertainty while accessing finance.Practical implications: The findings would help managers, investors, regulators, and policymakers better understand the implication of economic policy uncertainty on the real economy. This study also sheds the light on the importance of minimizing volatility, ambiguity, and randomness in governmental decisions and policies. Regardless of the pertinence of these policies, arbitrariness surrounding their development and communication can limit their effectiveness and produce unwanted effects.Originality/value: This paper is closely related to prior literature that documents the behavior of credit providers and investors (the supply side) during the periods of economic uncertainty. The authors differ from this strand of literature by taking the perspective of firms – the demand side.

The purpose of this study is to explore the impact of ownership concentration on banks’ credit risk. The study employs a dynamic panel approach using data from 98 banks listed in the 10 Middle East and North African (MENA) emerging stock markets between 2003 and 2016. To better understand the nature of the relationship between ownership concentration and bank credit risk and how this relationship is shaped by the recent financial crisis, we conducted a pre‐ and postcrisis analysis. Our findings document a positive relationship between ownership concentration and nonperforming loans in the precrisis period, which surprisingly reverses during the postcrisis period. We argue that the reversal of this relationship is driven by changes in controlling shareholders’ risk aversion, behavior, and attitude prompted by the financial crisis. Given that central banks are entrusted with forestalling banks’ failure, incorporating ownership concentration, as a fundamental determinant of banks’ credit risk, is crucial to anticipate future financial calamities. Our findings highlight the gravity of agency problems in emerging MENA markets. Reinforcing firm‐level as well as country‐level governance mechanisms is crucial to restore a sound banking system, enhance markets’ integrity, and increase investors’ confidence.

Purpose: This study aims to examine the impact of working capital management (WCM) on firm performance. The authors pursue innovation by exploring how the level of financial constraints shapes the impact of WCM on corporate performance.Design/methodology/approach: In this study, the generalized method of moments (GMM) is used to analyze a sample of 753 firms listed on ten Middle East and North Africa (MENA) emerging markets.Findings: The authors' empirical analysis demonstrates that financially constrained firms are coerced to adopt an aggressive WCM approach to reduce investment in working capital, minimize financing costs and improve financial performance despite the risks associated with this strategy. Contrarily, financially unconstrained firms, uphold a high level of investments in working capital to grow sales and improve financial performance. The authors' results strongly reject the “one size fits all” approach of WCM. The authors assert that the degree of financial constraints largely defines the firm's optimal WCM approach.Practical implications: The authors' study reveals to financial managers the importance of adopting an appropriate WCM strategy that fits firm-specific characteristics and financial flexibility. The authors' results urge policy makers to ease access to financing to all firms to enhance both their financial flexibility and ability to respond efficiently to emerging investment opportunities as well as develop resilience to economic slumps.Originality/value: To the best knowledge of the authors, this is the first study that explores WCM and financial constraints in MENA emerging markets.